Hollywood’s Tax Bill

Vanity Fair has released its list of the top 40 Hollywood earners in 2009. CNN has the entire list but here’s a peek at the top 10:

1. Michael Bay, producer-director ($125 million)
2. Steven Spielberg, producer-director ($85 million)
3. Roland Emmerich, producer-director ($70 million)
4. James Cameron, producer-director ($50 million)
5. Todd Phillips, director ($44 million) – no relation, sadly
6. Daniel Radcliffe, actor ($41 million)
7. Ben Stiller, actor ($40 million)
8. Tom Hanks, actor ($36 million)
9. J. J. Abrams, producer-director ($36 million)
10. Jerry Bruckheimer, producer ($35.5 million)

(And no, it didn’t go unnoticed that none of the top ten are women. Just sayin’.)

Looking at the list, I thought it would be fun to figure some of the estimated tax bills. Of course, I don’t know what kind of expenses they have or how they arrange their affairs – whether they have losses, huge mortgages, business expenses, etc. I just took the basics (married or not, income, kids) and tried them out on a tax calculator. TurboTax has a fun one – it actually handles income estimates in the hundreds of millions of dollars – so I used that one for most of my calculations. Here are the results:

Michael Bay is, so far as I can tell from his bios, single. He grossed $125 million last year at the age of 44. Using the standard deduction, his taxable income would be $124,991,867, resulting in a tax of $43,724,837. After paying about 35% in taxes, he’d walk away with about $81,275,163.

Steven Spielberg is a different story. He’s married to Kate Capshaw and has seven children: Theo Spielberg, who was adopted by Kate Capshaw before their marriage and later adopted by Spielberg (21), Sasha Spielberg (19), Sawyer Spielberg (17), their adopted daughter Mikaela George Spielberg (13), Destry Allen Spielberg (13), Jessica Capshaw, (33) and Max Spielberg (24). Spielberg was age 63 in 2009 and his wife was 56. I assume that all of the children under the age of 24 were treated as dependents. That means that Spielberg’s taxable income would be $84,971,569. His tax bill would be $29,710,411, or 35% – same as Michael Bay. The result? He pockets about $55,289,589.

James Cameron is similarly situated. He was 55 in 2009 – and married (for the 5th time). He has four children, the oldest is 16. His taxable income would be $49,981,301. His tax bite would be $17,463,417 leaving him with $32,536,583.
You’ll notice that all three producers paid a marginal rate of 35% whether they made $125 million or less than half of that. The same rate applies at $1 million. And half a million. The 35% rate kicks in at $372,950, making even the cast of many reality shows in the same tax bracket as Bay, Spielberg, and Cameron.

Nothing earth-shattering here, just some fun facts for the weekend.

Kelly Phillips Erb

Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.

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